Biden asks to fund the oil reserves, Saudi Arabia and Russia say no
Complicated days for the Petroleum, complicated days for Joe Biden. More and more reservations about the US president’s request to drain the reserves (pun inevitable) of crude oil. A request aimed at lowering the price of oil on the market. The White House’s goal: to curb inflation that gallops at record rates, never so fast in the last 30 years in the United States. But there are those who are not there. And it’s not just about geopolitical or geo-economic rivals. In addition to Russia, in fact, it is above all theSaudi Arabia to stop Biden’s plans. This is despite other countries certainly not aligned with Washington’s wishes such as China have responded in the affirmative to the stars and stripes request.
In recent days, the number one of the White House announced that the US Department of Energy will make it available 50 million barrels of oil by the Strategic Petroleum Reserve. Of the 50 million barrels of oil that will be made available by the US, 32 million will be released by the Strategic Petroleum Reserve in the coming months, with the forecast that oil will eventually return to reserves in the years to come. The remaining 18 million will instead constitute an acceleration, again in the coming months, of an oil sale that Congress had previously authorized. An unprecedented action that also involved China, India, South Korea, Japan and the United Kingdom.
But not everything went as smoothly as Biden hoped. Some members of theOpec +, in particular Russia and Saudi Arabia have moved towards a revision of production plans following the release of strategic oil reserves decided by the USA. Riyadh and Moscow would have decided to pause the expected increase in supply at a pace equal to 400,000 barrels per day every month until next year. In a nutshell, it means that Saudi Arabia and Russia “consider a pause in production”: with the consequence that the hoped-for increase in crude oil on the market will not be or will be reduced, with consequent failure to lower prices. And, again, the resulting handful of flies for Biden.
Biden needs more oil to lower fuel prices
The US needs to stop inflation and expensive fuel. Also because the consumption of crude oil in the country is very high. The lack of response from the Secretary of Energy also makes it clear, Jennifer Granholm, to an uncomfortable question posed to her during the daily White House briefing. A CBS reporter asked the Secretary of Energy: “I would be curious to know how many barrels of oil are consumed in the United States every day …”. And Granholm admits he doesn’t know: “I don’t have the numbers in front of me, I’m sorry.” And the reporter replies: “Some suggest that there are around 18 million which would suggest that you are freeing less than three days of supply from the crude oil reserves. Do you think it will be enough?”.
According to official data, in 2020 the United States consumed an average of about 18.19 million barrels of oil per day (for a total of about 6.66 billion barrels), the lowest level on an annual basis since 1995. The drop in consumption in 2020 compared to 2019 was according to the US Energy Information Administration, the largest ever recorded in the United States and it was largely the result of the global response to the Covid pandemic. According to many analysts, on the basis of these data, the remedy devised by the White House was therefore temporary and lacking the ability to substantially affect the medium to long term.
Why Russia and Saudi Arabia say no to Biden
Ability to reduce even more, without coordinated help from other producers. But not everyone seems willing to give. It is no coincidence that the resistance comes from two countries with which Biden has not been able to develop a flourishing relationship at a diplomatic level. Obvious the tension with the Russia, if we consider the famous “killer” addressed by the American president to his counterpart Vladimir Putin during an interview whose echo was not canceled by the subsequent summit in Geneva. But also with theSaudi ArabiaOnce a staunch ally of Washington in the Middle East, relations are not experiencing a particularly positive moment.
Biden hasn’t spoken with yet Mohammed bin Salman, the crown prince and plenipotentiary in Riyadh. Which did not please the heir to the throne, who in the meantime has deepened and diversified his relations, looking for example at China. Not only. Restarting the negotiations with Iran, historic regional rival of Saudi Arabia, they are frowned upon. Even so, one can explain the Saudis’ lack of favor in Biden, who now risks having to deal with galloping inflation in his home.
#Oil #ArabiaRussia #niet #Biden #Pause #production #record #inflation